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Title of Journal: Ann Oper Res

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Abbravation: Annals of Operations Research

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Springer US

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1572-9338

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Retail service for mixed retail and Etail channel

Authors: Wei Hu Yongjian Li
Publish Date: 2010/12/03
Volume: 192, Issue: 1, Pages: 151-171
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Abstract

Together with regular retail channel a firm can distribute products directly through Internet referred to as an “etail” distribution channel The competitive edge of the retail channel lies in more valueadded services some of which are unavailable through the etail channel We consider a model mixed with retailing and etailing distribution channels where the service level and price decision are made respectively ex ante and ex post demand realizations From the firm’s perspective of managing the two channels we acquire the optimal decisions and characterize the effects of the demand uncertainty on the firm’s optimal retail service and expected profit Applying stochastic comparison method we show the firm’s retail service and profit both increase in the demand mean and the firm profits from the increase of the convex order of the demand by decreasing his service level Further if the coefficient of the demand increases we characterize that the firm benefits from it Finally several numerical studies are presented to gain insights

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